Abstract The overall goal of this proposal is to understand the cellular and molecular mechanisms that underlie normal specification of endocrine pancreas cell types. Our rationale is that this information will be invaluable to efforts to differentiate human stem cells into [unreadable]-cells and other pancreatic cell types in vitro, for use in transplantation therapies for diabetic patients. Our strategy is to exploit the zebrafish as a powerful vertebrate model to study the process of normal pancreas formation. We propose three Specific Aims, which build upon our previous work, and exploit a novel cell transplantation technique that we have developed to test in which germ-layer individual genes function. Our data from the previous funding period suggest that the signaling molecule Retinoic Acid (RA) is an instructive mesoderm-derived positive regulator of pancreas specification, while transcription factor Cdx4 functions in posterior endoderm as a negative regulator of pancreas specification. In preliminary experiments we have used microarray analysis to identify endodermal targets of RA signaling. Intriguingly, these targets include molecules able to negatively-regulate RA signaling, as well as transcription factors likely to function downstream of RA to specify pancreatic cell-types. In Aim 1 we will test the hypothesis that members of the Nr2f and Cyp26 families of negative-regulators of RA-signaling control pancreas specification and size. These experiments will make use of pharmacological inhibitors, zebrafish mutant analyses, morpholino-knockdown of gene function, and germ-layer specific cell transplantation. In Aim 2 we will test the hypothesis that RA-target genes encoding Hox, Tcf2 and Hb9 transcription factors function downstream of RA and Cdx4 to regulate pancreas specification and localization. These experiments will make use of gain and loss-of-function approaches coupled with germ-layer specific cell-transplantation. Finally, in Aim 3 we will explore the role of TGF[unreadable] class BMP signals in pancreas specification. We will use transgenic fish carrying heat-shock inducible BMP signaling components, and germ-layer specific cell transplantation, to test when and where BMP signals function. The proposed experiments will provide new insights into the regulation of the RA signaling pathway, which is critical for many different developmental and physiological processes. The work will also provide novel information relevant to the manipulation of pancreas cell types in vitro. Finally, we will begin to establish the molecular-genetic network that functions downstream of RA to specify endocrine pancreas cell types.